Significance

• The American worker with appropriate qualifying years of work history and credits can collect early retirement Social Security benefits with some restrictions. The benefits are not as much each month as they are for those who wait until full retirement age, and there may be an applied penalty for those who continue to work and earn.
  
  

Features

• The Social Security system permits early retirement for employees who have 40 credits or 10 years of work history with Social Security taxes paid into the system, and who meet the age requirement of 62. With those elements in place, the 62-year-old worker can receive 75 percent of the benefits he would receive at full retirement age. Full retirement age in 2010 is 66 or 67 determined by birth date, and Social Security bases early or late retirement benefits on a percentage of the full retirement age.
  
  

Effects

• Early retirement allows the worker to continue employment, either part time or full time. If employment income exceeds $14,160 (figure for 2010), Social Security imposes a penalty on income in excess of the regulation amount of that year. An early retiree is penalized $1 for every $2 made in excess of a specified amount ($14,160 in 2010) for any year except the year she reaches full retirement age. Regulation penalties that year are $1 for every $3 in excess of a stipulated amount. That amount for 2010 is $37,680, and Social Security only counts income prior to your birth date that year, according to the Social Security website.
  
  

Benefits

• The worker can receive Social Security benefits and not be concerned with employment income and penalties. Social Security will recalculate full retirement benefits based on any months for which Social Security imposed penalties, so the worker gets the benefit of the penalty. Social Security recalculates full retirement benefits for penalized workers in the month when the worker meets full retirement age, although he took early retirement.
  
  

Misconceptions

• Early retirement gives the employee less benefits each month over a longer period of time. Although the calculations look like it is less money, the figures work out about the same over a retirement lifetime. Social Security emphasizes that when to retire is a personal choice. Whether to take early retirement depends on intangibles like job satisfaction and emotional and financial preparedness for retirement.